Question

Kalyagin Investments acquired $233,600 of Jerris Corp., 6% bonds at their face amount on October 1,...

Kalyagin Investments acquired $233,600 of Jerris Corp., 6% bonds at their face amount on October 1, 2016. The bonds pay interest on October 1 and April 1. On April 1, 2017, Kalyagin sold $111,200 of Jerris Corp. bonds at 105.

Journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles and be sure to enter the year as part of the date):

2016
Oct. 1 Initial acquisition of the Jerris Corp. bonds
Dec. 31 Adjusting entry for three months of accrued interest earned on the Jerris Corp. bonds
2017
Apr. 1 Receipt of semiannual interest
1 Sale of $111,200 of Jerris Corp. bonds, at 105

Chart of Accounts

CHART OF ACCOUNTS
Kalyagin Investments
General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
161 Investments-Jerris Corp. Bonds
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
251 Sales Tax Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
350 Unrealized Gain (Loss) on Available-for-Sale Investments
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
611 Interest Revenue
612 Dividend Revenue
631 Gain on Sale of Investments
641 Unrealized Gain on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
731 Loss on Sale of Investments
741 Unrealized Loss on Trading Investments

Journal

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Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. Be sure to enter the year as part of the date.

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PAGE 10

JOURNAL

Score: 114/125

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Homework Answers

Answer #1

Journal entry :

Date account and explanation debit credit
Oct 1 Investments-Jerris Corp. Bonds 233600
Cash 233600
(To record investment in bonds)
Dec 31 Interest receivable (233600*6%*3/12) 3504
Interest revenue 3504
(To record accured interest)
Apr 1 Cash 7008
Interest receivable 3504
Interest revenue 3504
(To record interest receipt)
Apr 1 Cash (111200*1.05) 116760
  Gain on Sale of Investments 5560
  Investments-Jerris Corp. Bonds 111200
(To record sale of bonds)
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